By: Davis of Harris (Senate Sponsor - Lindsay) H.B. No. 3419
(In the Senate - Received from the House May 12, 2003;
May 13, 2003, read first time and referred to Committee on
Intergovernmental Relations; May 24, 2003, reported adversely,
with favorable Committee Substitute by the following vote: Yeas 5,
Nays 0; May 24, 2003, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 3419 By: Gallegos
A BILL TO BE ENTITLED
AN ACT
relating to procedural and technical corrections and clarification
of the Property Tax Code, procedures for the seizure and sale of
property, and distribution of ad valorem tax sale proceeds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 33.25, Tax Code, is amended to read as
follows:
Sec. 33.25. [NOTICE OF] TAX SALE: NOTICE; METHOD;
DISPOSITION OF PROCEEDS. (a) After [Except as provided by
Subsection (c), after] a seizure of personal property, the
collector shall make a reasonable inquiry to determine the identity
and to ascertain the address of any person having an interest in the
property other than the person against whom the tax warrant is
issued. The collector shall provide in writing the name and address
of each other person the collector identifies as having an interest
in the property to the peace officer charged with executing the
warrant. The peace officer shall deliver as soon as possible a
written notice stating the time and place of the sale and briefly
describing the property seized to the person against whom the
warrant is issued and to any other person having an interest in the
property whose name and address the collector provided to the peace
officer. The posting of the notice and the sale of the property
shall be conducted:
(1) in a county other than a county to which
Subdivision (2) applies, by the peace officer in the manner
required for the sale under execution of personal property; or
(2) in a county having a population of three million or
more:
(A) by the peace officer or collector, as
specified in the warrant, in the manner required for the sale under
execution of personal property; or
(B) under an agreement authorized by Subsection
(b).
(b) The commissioners court of a county having a population
of three million or more by official action may authorize a peace
officer or the collector for the county charged with selling
property under this subchapter by public auction to enter into an
agreement with a person who holds an auctioneer's license to
advertise the auction sale of the property and to conduct the
auction sale of the property. The agreement may provide for on-line
bidding and sale.
(c) The commissioners court of a county that authorizes a
peace officer or the collector for the county to enter into an
agreement under Subsection (b) may by official action authorize the
peace officer or collector to enter into an agreement with a service
provider to advertise the auction and to conduct the auction sale of
the property or to accept bids during the auction sale of the
property under Subsection (b) using the Internet.
(d) The terms of an agreement entered into under Subsection
(b) or (c) must be approved in writing by the collector for each
taxing unit entitled to receive proceeds from the sale of the
property. An agreement entered into under Subsection (b) or (c) is
presumed to be commercially reasonable, and the presumption may not
be rebutted by any person.
(e) Failure to send or receive a [the] notice required
[provided] by this section does not affect the validity of the sale
or title to the seized property.
(f) The proceeds of a sale of property under this section
shall be applied to:
(1) any compensation owed to or any expense advanced
by the licensed auctioneer under an agreement entered into under
Subsection (b) or a service provider under an agreement entered
into under Subsection (c);
(2) all usual costs, expenses, and fees of the seizure
and sale, payable to the peace officer conducting the sale;
(3) all additional expenses incurred in advertising
the sale or in removing, storing, preserving, or safeguarding the
seized property pending its sale;
(4) all usual court costs payable to the clerk of the
court that issued the tax warrant; and
(5) taxes, penalties, and interest included in the
application for warrant.
(g) The peace officer or licensed auctioneer conducting the
sale shall pay all proceeds from the sale to the collector
designated in the tax warrant for distribution as required by
Subsection (f).
(h) [(c)] After a seizure of personal property defined by
Sections 33.21(d)(2)-(5), the collector shall apply the seized
property toward the payment of the taxes, penalties, and interest
included in the application for warrant and all costs of the seizure
as required by Subsection (f).
SECTION 2. Section 33.91, Tax Code, is amended by amending
Subsection (a) and adding Subsection (c) to read as follows:
(a) After notice has been provided to a person, the person's
real property, whether improved or unimproved, is subject to
seizure by a municipality for the payment of delinquent ad valorem
taxes, penalties, and interest the person owes on the property and
the amount secured by a municipal health or safety lien on the
property if:
(1) the property:
(A) is in a municipality;
(B) is less than one acre; and
(C) has been abandoned [, unused, and vacant] for
at least one year;
(2) the taxes on the property are delinquent for:
(A) each of the preceding five years; or
(B) each of the preceding three years if a lien on
the property has been created on the property in favor of the
municipality for the cost of remedying a health or safety hazard on
the property; and
(3) the tax collector of the municipality determines
that seizure of the property under this subchapter for the payment
of the delinquent taxes, penalties, and interest, and of a
municipal health and safety lien on the property, would be in the
best interest of the municipality and the other taxing units after
determining that the sum of all outstanding tax and municipal
claims against the property plus the estimated costs under Section
33.48 of a standard judicial foreclosure exceed the anticipated
proceeds from a tax sale.
(c) For purposes of this section, a property is presumed to
have been abandoned for at least one year if, during that period,
the property has remained vacant and a lawful act of ownership of
the property has not been exercised. The tax collector of a
municipality may rely on the affidavit of any competent person with
personal knowledge of the facts in determining whether a property
has been abandoned or vacant. For purposes of this subsection:
(1) property is considered vacant if there is an
absence of any activity by the owner, a tenant, or a licensee
related to residency, work, trade, business, leisure, or
recreation; and
(2) "lawful act of ownership" includes mowing or
cutting grass or weeds, repairing or demolishing a structure or
fence, removing debris, or other form of property upkeep or
maintenance performed by or at the request of the owner of the
property.
SECTION 3. Section 33.911, Tax Code, is amended by amending
Subsection (a) and adding Subsection (c) to read as follows:
(a) After notice has been provided to a person, the person's
real property, whether improved or unimproved, is subject to
seizure by a county for the payment of delinquent ad valorem taxes,
penalties, and interest the person owes on the property if:
(1) the property:
(A) is in the county;
(B) is not in a municipality; and
(C) has been abandoned [, unused, and vacant] for
at least one year;
(2) the taxes on the property are delinquent for each
of the preceding five years; and
(3) the county tax assessor-collector determines that
seizure of the property under this subchapter for the payment of the
delinquent taxes, penalties, and interest would be in the best
interest of the county and the other taxing units after determining
that the sum of all outstanding tax and county claims against the
property plus the estimated costs under Section 33.48 of a standard
judicial foreclosure exceed the anticipated proceeds from a tax
sale.
(c) For purposes of this section, a property is presumed to
have been abandoned for at least one year if, during that period,
the property has remained vacant and a lawful act of ownership of
the property has not been exercised. The tax collector of a county
may rely on the affidavit of any competent person with personal
knowledge of the facts in determining whether a property has been
abandoned or vacant. For purposes of this subsection:
(1) property is considered vacant if there is an
absence of any activity by the owner, a tenant, or a licensee
related to residency, work, trade, business, leisure, or
recreation; and
(2) "lawful act of ownership" includes mowing or
cutting grass or weeds, repairing or demolishing a structure or
fence, removing debris, or other form of property upkeep or
maintenance performed by or at the request of the owner of the
property.
SECTION 4. Section 33.912, Tax Code, is amended to read as
follows:
Sec. 33.912. NOTICE. (a) A person is considered to have
been provided the notice required by Sections 33.91 and 33.911 if by
affidavit or otherwise the collector shows that the assessor or
collector for the municipality or county mailed the person each
bill for municipal or county taxes required to be sent the person by
Section 31.01:
(1) in each of the five preceding years, if the taxes
on the property are delinquent for each of those years; or
(2) in each of the three preceding years, if:
(A) the taxes on the property are delinquent for
each of those years; and
(B) a lien on the property has been created on the
property in favor of the municipality for the cost of remedying a
health or safety hazard on the property.
(b) If notice under Subsection (a) is not provided, the
notice required by Section 33.91 or 33.911 shall be given by the
assessor or the collector for the municipality or county, as
applicable, by:
(1) serving, in the manner provided by Rule 21a, Texas
Rules of Civil Procedure, a true and correct copy of the application
for a tax warrant filed under Section 33.92 to each person known, or
constructively known through reasonable inquiry, to own or have an
interest in the property;
(2) publishing in the English language a notice of the
assessor's intent to seize the property in a newspaper published in
the county in which the property is located if, after exercising
reasonable diligence, the assessor or collector cannot determine
ownership or the address of the known owners; or
(3) if required under Subsection (g), posting in the
English language a notice of the assessor's intent to seize the
property if, after exercising reasonable diligence, the assessor or
collector cannot determine ownership or the address of the known
owners.
(c) A notice under Subsection (b)(1) shall be provided at
the time of filing the application for a tax warrant and must be
supported by a certificate of service appearing on the application
in the same manner and form as provided by Rule 21a, Texas Rules of
Civil Procedure. The notice is sufficient if sent to the person's
last known address.
(d) A notice by publication or posting under Subsection (b)
must substantially comply with this subsection. The notice must:
(1) be published or posted at least 10 days but not
more than 180 days before the date the application for tax warrant
under Section 33.92 is filed;
(2) be directed to the owners of the property by name,
if known, or, if unknown, to "the unknown owners of the property
described below";
(3) state that the assessor or collector intends to
seize the property as abandoned property and that the property will
be sold at public auction without further notice unless all
delinquent taxes, penalties, and interest are paid before the sale
of the property; and
(4) describe the property.
(e) A description of the property under Subsection (d)(4) is
sufficient if it is the same as the property description appearing
on the current tax roll for the county or municipality.
(f) A notice by publication or posting under Subsection (b)
may relate to more than one property or to multiple owners of
property.
(g) For publishing a notice under Subsection (b)(2), a
newspaper may charge a rate that does not exceed the greater of two
cents per word or an amount equal to the published word or line rate
of that newspaper for the same class of advertising. If notice
cannot be provided under Subsection (b)(1) and there is not a
newspaper published in the county where the property is located, or
a newspaper that will publish the notice for the rate authorized by
this subsection, the assessor shall post the notice in writing in
three public places in the county. One of the posted notices must
be at the door of the county courthouse. Proof of the posting shall
be made by affidavit of the person posting the notice or by the
attorney for the assessor or collector.
(h) A person is considered to have been provided the notice
under Section 33.91 or 33.911 in the manner provided by Subsection
(b) if the application for the tax warrant under Section 33.92:
(1) contains the certificate of service as required by
Subsection (b)(1);
(2) is accompanied by an affidavit on behalf of the
applicable assessor or collector stating the fact of publication
under Subsection (b)(2), with a copy of the published notice
attached; or
(3) is accompanied by an affidavit of posting on
behalf of the applicable assessor or collector under Subsection (g)
stating the fact of posting and facts supporting the necessity of
posting.
(i) A failure to provide, give, or receive a notice provided
under this section does not affect the validity of a sale of the
seized property or title to the property.
(j) The costs of publishing notice under this section are
chargeable as costs and payable from the proceeds of the sale of the
property.
SECTION 5. Section 33.92, Tax Code, is amended by amending
Subsection (b) and adding Subsection (d) to read as follows:
(b) The court shall issue the tax warrant if by affidavit
the collector shows that the property is subject to seizure under
Section 33.91 or 33.911. The collector may show that the property
has been abandoned or vacant for at least one year, as required by
Section 33.91(a)(1)(C) or 33.911(a)(1)(C) by affidavit of any
competent person with personal knowledge of the relevant facts.
(d) The collector is entitled, on request in the
application, to recover attorney's fees in an amount equal to the
compensation specified in the contract with the attorney for
collection of the delinquent taxes, penalties, and interest on the
property if:
(1) the taxing unit served by the collector contracts
with an attorney under Section 6.30;
(2) the existence of the contract and the amount of
attorney's fees that equal the compensation specified in the
contract are supported by the affidavit of the collector; and
(3) the delinquent tax sought to be recovered is not
subject to an additional penalty under Section 33.07 or 33.08 at the
time the application is filed.
SECTION 6. Sections 33.93(a) and (c), Tax Code, are amended
to read as follows:
(a) A tax warrant shall direct the sheriff or a constable in
the county and the collector for the municipality or the county to
seize the property described in the warrant, subject to the right of
redemption, for the payment of the ad valorem taxes, penalties, and
interest owing on the property included in the application, any
attorney's fees included in the application as provided by Section
33.92(d), the amount secured by a municipal health or safety lien on
the property included in the application, and the costs of seizure
and sale. The warrant shall direct the person whose property is
seized to disclose to a person executing the warrant the name and
address if known of any other person having an interest in the
property.
(c) On issuance of a tax warrant, the collector shall take
possession of the property pending its sale by the officer charged
with selling the property.
SECTION 7. Section 33.94(a), Tax Code, is amended to read as
follows:
(a) After a seizure of property, the collector for the
municipality or county shall make a reasonable inquiry to determine
the identity and address of any person, other than the person
against whom the tax warrant is issued, having an interest in the
property. The collector shall deliver as soon as possible a notice
stating the time and place of the sale and briefly describing the
property seized to:
(1) the person against whom the warrant is issued,
including each person to whom notice was provided under Section
33.912(a);
(2) each person to whom notice was provided under
Section 33.912(b)(1); and
(3) [to] any other person the collector determines has
an interest in the property if the collector can ascertain the
address of the other person.
SECTION 8. Sections 34.01(a) and (r), Tax Code, are amended
to read as follows:
(a) Real property [Property] seized under a tax warrant
issued under Subchapter E, Chapter 33, or ordered sold pursuant to
foreclosure of a tax lien shall be sold by the officer charged with
selling the property, unless otherwise directed by the taxing unit
that requested the warrant or order of sale or by an authorized
agent or attorney for that unit. The sale shall be conducted in the
manner similar property is sold under execution except as otherwise
provided by this subtitle.
(r) Except as provided by this subsection, a [A] sale of
real property under this section must take place at the county
courthouse in the county in which the land is located. The
commissioners court of the county may designate an [the] area in the
county courthouse or another location in the county where sales
under this section must take place and shall record any designated
area or other location in the real property records of the county.
If the commissioners court designates an area in the courthouse or
another location in the county for sales, a sale must occur in that
area or at that location. If the commissioners court does not
designate an area in the courthouse or another location in the
county for sales, a sale must occur in the same area in the
courthouse that is designated by the commissioners court for the
sale of real property under Section 51.002, Property Code.
SECTION 9. Sections 34.02(b) and (d)-(f), Tax Code, are
amended to read as follows:
(b) The proceeds shall be applied to:
(1) the [all] costs of advertising the tax sale [and
all original court costs payable to the clerk of the court];
(2) any [all] fees ordered by the judgment to be paid
[and commissions payable] to an appointed attorney ad litem [the
officer conducting the sale];
(3) the original court costs payable to the clerk of
the court [taxes, penalties, and interest that are due under the
judgment]; [and]
(4) the fees and commissions payable to the officer
conducting the sale;
(5) the expenses incurred by a taxing unit in
determining necessary parties and in procuring necessary legal
descriptions of the property if those expenses were awarded to the
taxing unit by the judgment under Section 33.48(a)(4);
(6) the taxes, penalties, interest, and attorney's
fees that are due under the judgment; and
(7) any other amount awarded to a taxing unit under the
judgment.
(d) The [If the sale is pursuant to foreclosure of a tax
lien, the] officer conducting a [the] sale under Section 33.94 or
34.01 shall pay any excess proceeds after payment of all amounts due
all participants in the sale as specified by Subsection (b) to the
clerk of the court issuing the warrant or order of sale.
(e) [If the sale is pursuant to seizure of personal
property, the officer conducting the sale shall distribute any
excess of proceeds as provided by law for excess proceeds in the
case of execution.
[(f)] In this section, "taxes" includes a charge, fee, or
expense that is expressly authorized by Section 32.06 or 32.065.
SECTION 10. Section 34.04(c), Tax Code, is amended to read
as follows:
(c) At the hearing the court shall order that the proceeds
be paid according to the following priorities to each party that
establishes its claim to the proceeds:
(1) to the tax sale purchaser if the tax sale has been
adjudged to be void and the purchaser has prevailed in an action
against the taxing units under Section 34.07(d) by final judgment;
(2) to a taxing unit for any taxes, penalties, or
interest that have become due or delinquent on the subject property
subsequent to the date of the judgment or that were omitted from the
judgment by accident or mistake;
(3) to any other lienholder, consensual or otherwise,
for the amount due under a lien, in accordance with the priorities
established by applicable law;
(4) to a taxing unit for any unpaid taxes, penalties,
interest, or other amounts adjudged due under the judgment that
were not satisfied from the proceeds from the tax sale; and
(5) to each former owner of the property, as the
interest of each may appear.
SECTION 11. Section 34.06(d), Tax Code, is amended to read
as follows:
(d) After retaining the amount authorized by Subsection
(c), the purchasing taxing unit shall then pay all costs of[:
[(1) the officer conducting the sale of the property;
and
[(2) the clerk of the court in connection with] the
suit and the sale of the property in the same manner and in the same
order of priority as provided by Sections 34.02(b)(1)-(5).
SECTION 12. Section 34.21, Tax Code, is amended by adding
Subsection (k) to read as follows:
(k) The inclusion of dues and assessments for maintenance
paid to a property owners' association within the definition of
"costs" under Subsection (g) may not be construed as:
(1) a waiver of any immunity to which a taxing unit may
be entitled from a suit or from liability for those dues or
assessments; or
(2) authority for a taxing unit to make an expenditure
of public funds in violation of Section 50, 51, or 52(a), Article
III, or Section 3, Article XI, Texas Constitution.
SECTION 13. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2003.
SECTION 14. The change in law made by Section 1 of this Act
applies only to the sale of tax foreclosed property pursuant to an
order of sale issued on or after the effective date of this Act.
SECTION 15. The changes in law made by Sections 2, 3, 4, 5,
6, 7, and 8 of this Act apply only to an ad valorem tax proceeding
that is commenced on or after the effective date of this Act. An ad
valorem tax proceeding that was commenced before the effective date
of this Act is governed by the law as it existed on the date the
proceeding was commenced, and the former law is continued in effect
for that purpose.
SECTION 16. The change in law made by Section 9 of this Act
applies to a distribution of proceeds from an ad valorem tax sale
that is made on or after the effective date of this Act, regardless
of whether the tax sale was conducted before, on, or after that
date.
SECTION 17. The change in law made by Section 10 of this Act
applies to any cause of action that is pending on the effective date
of this Act or brought on or after that date.
SECTION 18. The changes in law made by Section 11 of this
Act apply to a distribution of the proceeds of a resale of property
made on or after the effective date of this Act, regardless of
whether the resale was conducted before, on, or after that date.
* * * * *